What Happens When You Apply for Too Many New Credit Cards at Once?

It's important to understand the consequences.

Some consumers have one or two credit cards and nothing more. Others might have 10 or 12.

When it comes to determining what the ideal number of credit cards is, that really depends on the individual. Generally, as long as you're managing your spending well, you're in good shape whether you have three credit cards or nine.

But one thing you don't want to do is apply for too many new credit cards in a short period of time. Doing so could cause damage to your credit score, making it more expensive to borrow money when you need to.

Don't wreck your credit for no good reason

When we talk about credit score, generally, we're referring to the FICO® Score. That score is made up of five distinct components, each of which carries a different amount of weight:

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• New credit cards: 10%
• Credit mix: 10%

As you can see, new credit cards only accounts for 10% of your total credit score. So you might think it's not a big deal to apply for a bunch of new cards within the same few weeks or months.

But remember, each time you apply for a new credit card, it results in a hard inquiry on your credit report, which could lead to a five- to 10-point drop in your credit score. A single drop like that may not matter so much, but multiple small hits in short order could bring your score down quickly.

That's why it's a better idea to space out your credit card applications. A good bet, in fact, is to limit yourself to a new credit card every six months. If that's not doable for you, aim to only apply for one new card every three months.

Remember, if you establish a pattern of applying for too many new cards, it might raise a red flag that credit card companies pay attention to. That could mean getting rejected from a great credit card offer, like a card that offers outstanding rewards or a super generous sign-up bonus.

Too many credit cards could also lead to debt

Credit score damage aside, another problem with applying for too many new credit cards at once is that you might be tempted to spend more. And that could lead to a situation where you're unable to pay off your balances in full and you end up with expensive debt.

In the course of applying for credit cards, it's easy to focus on factors like rewards and less so on the interest rate you'll be charged once you fail to pay off a balance in full. But getting access to a higher spending limit quickly might lead to a scenario where you're loaded with debt and the interest you accrue eventually exceeds the initial balances you racked up.

So all told, spacing out your credit card applications really is your best move. It might mean passing on some great offers, but it might help you avoid a financial hit.